Impacts to DVC from the Coronavirus Pandemic in the Short and Long-Term
This week Disney announced the closing of the Disneyland and Disney World parks through March 31st. The official statement was as stated:
“In an abundance of caution and in the best interest of our guests and employees, we are proceeding with the closure of our theme parks at Walt Disney World Resort in Florida and Disneyland Paris Resort, beginning at the close of business on Sunday, March 15, through the end of the month.
Disney Cruise Line will suspend all new departures beginning Saturday, March 14, through the end of the month.
The Walt Disney Company will pay its Cast Members during that closure period.
The hotels at both Walt Disney World and Disneyland Paris will remain open until further notice. The retail and dining complexes, Disney Springs at Walt Disney World and Disney Village at Disneyland Paris, will remain open.
Domestic Walt Disney Company employees who are able to work from home are being asked to do so, including those at the Walt Disney Studios, Walt Disney Television, ESPN, Direct-to-Consumer, and Parks, Experiences and Products.
We will continue to stay in close contact with appropriate officials and health experts.”
This move is no doubt the right one as it puts health above profits, and from a legal standpoint, significantly reduces liability.
The Short-Term Impact to DVC
The current environment of the coronavirus pandemic in the US is highly unnerving. While we know we will turn the corner and things will get better, the answer to when is still unknown. Disney like many others are taking an abundance of caution, which is a very good thing and will hopefully greatly increase the odds of getting through this pandemic much faster.
In the short-term, it will be a buyer’s market for DVC resale. There is already a healthy supply of inventory, and with everyone on edge, there is likely to be less buyers than usual. So, for the buyer’s in the market, they will have an excellent selection, easy financing and will very likely be able to negotiate stronger deals.
For sellers of DVC resale in the short-therm, they will likely need to be more negotiable to sell their contracts. If a seller is not in a rush and doesn’t mind waiting perhaps a few months or more, they may not be as negotiable, but for sellers wanting their contract sold within a few weeks, it is highly recommended they either reduce their price or be more willing to negotiate perhaps a little more than they would have been previously.
The Long-Term Impact to DVC
While there is no exact comparable to the coronavirus pandemic in the history of Disney Parks and DVC, it did remind many of the long-time DVC veterans on our DVC Resale Market Team of DVC during and after 9/11. While this pandemic is not a terrorist attack and has certainly not claimed as many American lives as 9/11, it has made the US declare a national emergency and caused Disney to shut down its parks.
When we consider this comparable, there is some good news for Disney fans and DVC Members. While both events are shocking and scary, in the aftermath of 9/11, DVC came out strong. In the immediate years following 9/11, many Americans opted for domestic over international vacations and wanted to go somewhere safe and reliable like Disney. Additionally, times like this remind us of how fragile life can be, and the importance of making the most of everyday with our loved ones. One of the reasons I’ve always been passionate about Disney is that I believe it embodies family entertainment and togetherness. And there is no better way to ensure your family of continued Disney vacations and memories than Disney Vacation Club.
Humberto Santos, a member of the DVC Resale Market Team and a long time DVC Guide, said that in the month of September 2001, he sold 30 DVC contracts, of which 27 cancelled. That was a 90% cancel rate, when he typically had a cancellation rate under 10%. In November of 2001, just two months later, he recorded one of the best months he ever had. Karen Guyder, another DVC Resale Market Team member and former DVC Guide had a similar experience in 2001.
While no event is exactly like another, I do believe Disney will thrive once the recovery from the coronavirus pandemic starts and likely stronger than ever, propelling DVC along with it.